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MARCH 7, 2024

BITCOIN ETFS SUCCESS

The success of Bitcoin exchange traded funds has driven the cryptocurrency to a reach new highs, and this is because the significant inflows ETFs are experiencing, leading companies to buy Bitcoin to keep up. On March 5, the BlackRock ETF (IBIT) alone saw a record $788.3 million influx, enabling the purchase of over 11,000 Bitcoins. Despite this, the total net inflows for all ETFs were slightly lower at just under $650 million due to various factors like high fees and sellers exiting other ETFs. As of now, the outlook of whether this momentum can be sustained is uncertain as some analysts remain optimistic due to the upcoming Bitcoin halving in April, while others foresee a broader bull market scenario. Nonetheless, despite the uncertainty, the significant impact of ETFs on the market is indisputable, and the evolving dynamics in the near future will be closely watched to gauge the sustainability of this upward trend.

GOLD CONTINUES TO SHINE

Following remarks by Federal Reserve Chair Jerome Powell hinting at a potential decrease in U.S. interest rates, gold prices surged once again to record highs as the spot gold price saw a 0.4% increase, reaching $2,157.51 per ounce. Investors are increasingly turning to gold as a reliable investment amidst concerns regarding diminishing inflation rates and declining real yields. Moreover, Powell’s remarks, coupled with weak labor market data, led to lower U.S. Treasury yields, further boosting gold demand. Furthermore, as we look forward, all eyes are on the upcoming release of the U.S. job report for February, scheduled for tomorrow morning. This report is expected to provide insight into potential U.S. rate adjustments, and analysts predict that if the results show weakness, it could drive gold prices closer to $2,200 per ounce in the spot market.

STRUGGLING YET OPTIMISTIC

New York Community Bancorp (NYCB) faced a significant decline in deposits, losing 7% within just a month, posing challenges for the new investor group led by Steve Mnuchin. The bank’s total deposits dropped from $83 billion to $77.2 billion, with approximately $7.8 billion of uninsured deposits vanishing. In response to this alarming trend, NYCB took swift action by appointing a new CEO and securing a $1 billion investment from Mnuchin’s Liberty Strategic Capital, along with support from other financial firms. Former Comptroller of the Currency Joseph Otting is set to lead the bank, intending to implement strategies aimed at reducing the dividend and fortifying capital and credit management practices. Despite recent setbacks, NYCB remains steadfast, having experienced only a 5% deposit decrease since the beginning of the year. The company’s focus on stability, operational enhancements, and growth outlook underlines its commitment to weather challenges and ensure a robust performance moving forward.

UNEMPLOYMENT ON THE RISE

According to the latest U.S. Department of Labor’s report, the number of U.S. citizens applying for unemployment insurance benefits rose by 217,000 in the week ending March 2. This increase slightly exceeded initial projections of 215,000 and aligned with the previous week’s uptick. Additionally, the report indicated that the advance seasonally adjusted insured unemployment rate was 1.3%, with the 4-week moving average dropping to 212,250, reflecting a decrease of 0.75K from the revised average of the previous week. These statistics underscore the ongoing challenges faced by individuals seeking job security amidst economic fluctuations, highlighting the impact of varying factors on the labor market and the importance of monitoring these trends to assess the overall state of the economy in the U.S.

INTERNATIONAL NEWS

In line with expectations, European Central Bank policymakers have announced a downgrade in the annual growth forecast and a decision to maintain interest rates. Their latest projections for 2024 now indicate a 0.6% economic growth rate, lowered from the previous 0.8%, and a revised inflation forecast of 2.3%, down from the prior estimate of 2.7%. Moreover, it is worth noting that despite holding the key rate at a record high of 4% following a series of 10 consecutive rate hikes from -0.5% in June 2022, the ECB is facing anticipation from the market regarding the possibility of rate cuts, particularly highlighted in the forthcoming March meeting and a growing focus on the June gathering. Furthermore, in further economic indicators, it was observed that Euro zone inflation slightly decreased to 2.6% in February, showing gradual progress towards the ECB’s target of 2%, while core inflation, excluding volatile items such as energy and food, remained at a relatively higher level of 3.1%.

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